New Zealand’s infrastructure is under pressure from two directions at once. Decades of underinvestment have left parts of our built environment ageing and, in some cases, no longer fit for purpose, at the very moment the country is experiencing rapid population growth. Many local authorities are already at, or nearing, their debt and borrowing limits, which leaves them with less room to respond just as demand is increasing.
Property Council New Zealand believes this challenge can be met, but only with a coordinated, system-wide approach that brings government and the private sector together, and a planning system that genuinely enables growth in all its forms, not just some of them.
A funding system under strain
Local authorities already have access to a broad suite of funding and financing tools: general and targeted rates, special purpose vehicles, user charges, development contributions, regional and city deals, debt financing and asset recycling. The issue is not a lack of tools, it is that they are not always used effectively or consistently, and their cumulative effect is rarely considered as a whole.
Individually, central government taxes, local government rates, rating differentials, financial contributions, development contributions and targeted rates may each look manageable. Combined, they can significantly undermine the viability of projects. A more strategic, disciplined approach to infrastructure funding is needed, one that looks at the full stack of charges a development faces, not just each one in isolation.
Growing up and out
Meeting New Zealand’s growth needs also requires a genuinely balanced approach to urban development. Property Council supports cities growing both up and out. Greenfield expansion remains an important part of the picture, but planning frameworks also need to enable intensification in areas with real capacity for growth, particularly in city centres and around key transport nodes.
This is not an either-or question. A city that only grows outward places ever-increasing pressure on new, often unfunded, infrastructure at the urban fringe. A city that only intensifies risks missing genuine housing capacity elsewhere. The right answer is both, applied where each makes the most sense, supporting good urban form and creating more connected, vibrant communities in the process.
Unlocking the tools already available
Alongside better use of existing tools, Property Council supports expanding the use of alternative funding and financing mechanisms. Special Purpose Vehicles can play an important role for high-growth councils nearing their debt limits, enabling investment in new infrastructure while keeping that debt off council balance sheets. Greater use of non-strategic asset recycling and public private partnerships should also be encouraged, alongside empowering local authorities to introduce targeted user charges, such as volumetric wastewater pricing and road congestion charging, where appropriate.
None of this works in isolation. Well-functioning infrastructure underpins thriving communities, and delivering it requires infrastructure to be effectively planned, delivered, managed and future-proofed, not treated as a series of disconnected funding decisions made under pressure.
What good looks like
Get this right, and the benefits compound across the whole system:
- a more coordinated planning system that enables New Zealand and its communities to thrive.
- improved urban form, delivering more liveable cities while responding to growth pressures.
- stronger partnerships between government and the private sector, unlocking growth and investment opportunities.
Our recommendations
Property Council’s recommendations to government are to:
- respond to urban growth by enabling development both up and out, with a focus on intensification in CBDs and around key transport nodes.
- Enable Value Capture as a funding tool for large infrastructure projects.
Chief executive Leonie Freeman says the scale of the opportunity matches the scale of the challenge.
“New Zealand can’t build its way out of a growing population with greenfield development alone, and it can’t meet housing demand through intensification alone either. We need both, backed by a funding system that’s used strategically rather than piecemeal. Abolishing rating differentials and genuinely enabling development both up and out would give councils and developers the tools they need to build the infrastructure our growing cities depend on.”
Property Council will continue to work with central and local government to unlock the funding, financing and planning settings New Zealand needs to support growth, now and over the long term.
If you want to join our Infrastructure Funding and Financing Taskforce, get in touch with Senior Advocacy Advisor, Bella Leddy.
Author | Bella Leddy
As a Senior Advocacy Advisor, Bella leads the development of policy and advocacy initiatives that reflect the real-world experience of our members.
With a Bachelor of Laws and Politics from Otago University and previous experience as a policy intern at the Department of Internal Affairs, Bella brings both a sharp analytical mind and a genuine passion for public policy. She’s particularly energised by engaging with members to ensure our advocacy is grounded in industry insight and practical solutions.
Extroverted, thoughtful and service-focused, Bella thrives in roles that connect people and ideas. Outside the office, she channels her energy into teaching group fitness classes – including yoga, pilates and spin – and is always up for a good political yarn.